The performance is affected by the decline in industry demand and the rise in raw material prices. Adi Precision announced in the mid-2022 report that operating income in the first half of the year was 1.03 billion yuan, down 37.1% from the same period last year; net profit from home was 120 million yuan, down 63.7% from the same period last year; and earnings per share was 0.15 yuan. The net cash inflow from operating activities was 90 million yuan, down 43.2% from the same period last year. The gross profit margin was 29.2%, down 7.2% from the same period last year, mainly due to the rise in the price of raw materials; the net profit margin was 11.8%, down 8.7% from the same period last year.
The business of hydraulic parts still has broad room for growth.
In the first half of the year, the company's crushing hammer business achieved revenue of 430 million yuan, down 38.4% from the same period last year, mainly affected by the downward trend of the excavation machinery industry. The company is market-oriented, increases the advantage of differentiation, consolidates the market share of light and medium-sized hydraulic crushing hammer products, and focuses on strengthening the R & D and production of heavy hydraulic crushing hammer products. strive to make greater breakthroughs in the working durability and striking ability of the products.
In the first half of the year, the company's hydraulic parts business achieved revenue of 580 million yuan, down 36.7% from the same period last year. In the after-sales market of hydraulic parts, the company expands its market share on the basis of brand building; in the mainframe market, it strengthens the cooperation with well-known mainframe manufacturers of construction machinery, establishes and improves the terminal sales service network, and vigorously expands new customers; in the export market, attract customers through product customization and services, increase the number of overseas customers and disperse trade policy risks. With the rapid localization of high-end hydraulic parts in recent years, the market share of domestic brand hydraulic parts has greatly increased; we believe that the company's hydraulic parts business still has a broad space for growth.
Continue to promote the research and development of robots, cemented carbide and other new products
In the first half of 2022, the company spent 50 million yuan on R & D, and the rate of R & D expenditure rose to 5.1%. The company strengthens basic technology research, aims at the research and development of high value-added and high-tech products, and develops a full range of hydraulic parts, including hydraulic parts for micro-digging, small digging, middle digging and large digging. High-altitude working platform vehicle hydraulic parts, rotary drilling rigs hydraulic parts, loader hydraulic parts, etc., to lay a good foundation for the full range of high-end hydraulic parts in the future. The company develops new product lines and sets up a special R & D team for the research and development of industrial multi-axis robots and cemented carbide products such as blades, cutters, handles and so on.
Maintain the "overweight" rating
Based on the changes in industry demand and the impact of raw material costs on profit margins, we downgrade the company's 22-24 net profit forecast of 21.9%, 14.3%, 8.7% to 2.8, respectively, and the EPS for 22-24 is 0.33, 0.45, 0.58, respectively. The company benefits from the general trend of localization, hydraulic parts and new products still have room for growth, to maintain the company's "overweight" rating.
Risk tips: downstream boom downside risk; industry competition intensifies risk; customer development is less than expected risk; raw material price fluctuation risk